“I hate it:” When Shark Tank investor Mark Cuban backed out from investing in Tycoon

Shark Tank season 6 episode 16 introduced viewers to Tycoon, a crowdfunding real estate business platform established by founder Aaron McDaniel. According to Aaron, the purpose of his business idea was to make investing in real estate accessible to all Americans who could invest up to $1000. During his pitch, Aaron asked for $50,000 for 5% equity of Tycoon.

Lori Greiner, Robert Herjavec, and Barbara Corcoran, alongside Mark Cuban, backed out from investing as they questioned the overall business model. Cuban was the first shark to say that he had backed out from placing an offer. He said:

"I hate it. I'm out."

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Shark Tank investor Mark Cuban questioned the risky business model of Tycoon

On Shark Tank, Tycoon founder Aaron McDaniel pitched his business idea based on a crowdfunding model in which Americans had the opportunity to invest in real estate. During his pitch, Mark Cuban questioned how risky the overall idea was and backed out immediately from placing an offer.

Barbara also had a similar take on Cuban's remarks, for her not knowing whether there was a legitimate investor was one of the major concerns. Cuban said:

"That's so horrible. That is wrong in so many ways there."

Meanwhile, Shark Tank investor Robert Herjavec empathized with people who weren't well informed about the real estate industry and would be willing to invest via a platform like Tycoon. He stated that people's life savings could be at risk and that there would be "no liquidity" for someone ready to invest their life savings for a "greater return." Herjavec continued:

"I think people have a physical emotional connection to their life savings. I love investing in real estate but I recognize it's pure luck. If you could buy any piece of real estate you will make money over ten years. I think when you deal with people's life savings. And I think this tracks the kind of person who wants a greater return for their retirement, I think you gotta be conserved with your money."

Aaron defended Tycoon and that they would "protect investors" to which Cuban was quick to respond. He elaborated on why he backed out from investing while mentioning the one major issue with crowdfunding-based investments, which was not limited to real estate only.

While stating a hypothetical scenario, Cuban explained that if someone invests all their life savings in real estate and gets sick, for example, they "need liquidity" which they won't have. The Shark Tank investor continued:

"Protect investors? The reason I went out and this is the same problem with a lot of crowd funding-based investments, not just real estate right? When grandma hears about crowdfunding and all these new opportunities are now available to normal Americans who want a touch a feel of real estate."

Despite Lori, Barbara, Robert, and Mark expressing skepticism about Tycoon, Aaron received an offer of $50,000 for 50% equity for complete rebranding. Aaron made a counteroffer of 10% equity and ended up not taking the original offer given by Mr. Wonderful.

New episodes of Shark Tank are available on ABC.